The Kenyan economy in 2022 was marked by many negative shocks from the supply side. The persistent shocks, which are still there, created negative effects, impacting economic activity and raising the cost of living. 

The latest data (Economic Survey 2023) from the Kenya National Bureau of Statistics (KNBS) released on Wednesday, May 3, indicates that most sectors recorded decelerated growth compared to 2021.

The real Gross Domestic Product (GDP) decelerated from a revised growth of 7.6 percent in 2021 to 4.8 percent in 2022. Most of the sectors of the economy posted decelerated growths mainly due to the significantly high growths attained in 2021 that signified recovery from the economic downturn in 2020.

The worst hit sector was agriculture, forestry and fishing, which contracted by 1.6 percent.

“The sector’s poor performance was mainly in crop and livestock production, which was severely affected by the widespread drought experienced in 2022. Low production of key food crops such as maize, potatoes, and vegetables was evident from the significantly high prices observed in 2022,” the report states.

Like other countries in the region, Kenya is emerging from the worst drought in four decades that has pushed up the price of basic commodities. It is also feeling the effects of a weaker shilling and increased public debt load.

The economic slowdown also saw the number of jobs, both in the formal and informal sectors, decrease to 816,600 last year from 924,900 in the previous year. In 2022, new jobs in the formal sector stood at 109,300, which was down from 163,500 recorded in 2021.  Every year, close to one million young Kenyans graduate from local institutions and they all aspire to be employed. Thousands of Kenyans have already graduated this year, with more expected to graduate before the end of the year.

During the year, Kenyans were hit by a build-up of inflationary pressures as prices of various commodities increased. Inflation rose from 6.1 percent in 2021 to 7.4 percent in 2022, mainly driven by a surge in food and energy prices.  

The manufacturing sector’s performance was relatively subdued compared to that of 2021. Growth slowed to 2.7 percent in 2022 compared to 7.3 percent in 2021. “The decelerated growth was partly attributed to low agricultural production especially food crops that are the main inputs in agro-processing,” the report says.

The construction sector also suffered as it only expanded by 4.1 percent in 2022 compared to 6.7 percent in 2021. The report notes that civil works such as construction and maintenance of roads during the year led to an increase in consumption of cement, a key input in the construction industry from 9.1 million tonnes in 2021 to 9.5 million tonnes in 2022.

The deceleration in the sector’s performance in 2022 was evident in the decline in the volume of imported construction materials. The number of cement clinkers, iron and steel, non-ferrous metals, and structural metals imported during the period under review reduced by 38.4 percent, 17.8 percent, 14 percent, and 47.4 percent, respectively, compared to 2021.

On electricity supply, the sector’s real Gross Value Added (GVA) was at 4.9 percent in 2022 compared to a growth of 5.3 percent in 2021. This was mostly attributed to the increase in total electricity generated from 12, 126.7 Gigawatt Hour (GWh) in 2021 to 12,669.4 GWh in 2022.  

The sector’s performance was further constrained by a 17.3 percent decline in hydroelectricity generation from 3,675.0 GWh in 2021 to 3,039.9 GWh in 2022 due to insufficient rains.

In the transport and storage sector, activities decelerated to a growth of 5.6 percent last year compared to a growth of 7.4 percent in 2021.

“The volume of freight transported by the Standard Gauge Railway (SGR) rose by 12.6 percent from 5,407.4 thousand tonnes in 2021 to 6,090.0 thousand tonnes in 2022, while the number of passengers using SGR increased by 20.5 percent from 1,985.8 thousand in 2021 to 2,392.3 thousand in 2022. Similarly, passenger traffic by air increased by 52.2 percent to 10.2 million in 2022, “the report states.

The slowdown in the sector’s growth was partly on account of a decline in total cargo throughput at the port of Mombasa by 1.9 percent to stand at 33,740.7 thousand metric tonnes in 2022.

On a positive note, the Information and Communication sector recorded a growth of 9.9 percent in 2022 compared to a growth of 6.1 percent in 2021. The growth was mainly supported by an increase in mobile money transfers. The value of mobile money transfers increased by 15.1 percent to stand at Ksh7.9 trillion in 2022.

The value of ICT equipment exports and imports increased by 4 percent and 14.1 percent to stand at Ksh2,179.5 million and Ksh55.2 billion in 2022, respectively.

The financial and insurance sector remained on a growth trajectory to expand by 12.8 percent in 2022 compared to 11.5 percent growth in 2021. The financial service activities grew by 11.7 percent in 2022 compared to the 7 percent growth in 2021.

The insurance sub-sector grew by 15.8 percent in 2022 compared to 26.9 percent growth in 2021. Net premiums increased from Ksh115.1 billion in 2021 to Ksh128.8 billion in 2022.

The Accommodation and Food services activities sector’s real GVA grew by 26.2 percent in 2022 compared to a growth of 52.6 percent in 2021. “The number of international visitor arrivals through Jomo Kenyatta International Airport (JKIA) and Moi International Airport (MIA) increased from 692.9 thousand visitors in 2021 to 1,198.7 thousand visitors in 2022,” the report says.

Further, the number of hotel bed nights occupied increased from 5.5 million in 2021 to 7 million in 2022. Overall bed occupancy rates increased from 20 percent in 2021 to 26 percent in 2022, while the number of conferences held increased by 25.6 percent to stand at 10,558 in 2022.